George Bush to Romanian Prime Minister Popescu-Tariceanu right before his departure for Zagreb —
I also congratulate the Prime Minister on having a 16 percent flat tax. I’m a little envious. I would like to have been able to achieve the same objective for our tax code, and it was a smart thing to get done, because I think those kinds of policies will enable the Romanian folks to have a bright future.
Bush had the same obsession on a visit to Estonia a while ago and it appears to be part of his bond with eastern European countries. The trouble is, as a supposed ingredient of his own policy objectives for the USA, it’s delusional.  He never made any concrete proposal for a flat tax, and his own tax cuts have made the tax code less flat: dividends and capital gains are taxed at a far lower rate than wage income (added: and there are no payroll taxes on capital income).   The 16% is also fantasy.  The federal government spends about 21% of GDP — and that’s before housing finance got socialised!Â
Well, he did a lot of things that never happened, didn’t he? Including declaring a “mission” as “accomplished”… – still, fits in nicely with this – American political economics in one picture.
“dividends and capital gains are taxed at a far lower rate than wage income. ”
Tsk. In the US system dividens are paid out of profits after corporation tax. Then they are taxed again at 15%.
Everyone else either taxes them at the corporate level or at the individual. Dividends in the US are taxed at about higher rate income tax, after the change.
Point taken Tim (and reflected above). But I suspect that there are strategies that can deliver a large amount of corporate income to shareholders at lower than the total wage income tax rate. Due to the non flat tax.
“But I suspect that there are strategies that can deliver a large amount of corporate income to shareholders at lower than the total wage income tax rate. Due to the non flat tax.”
Oh aye.